India’s private industry now accounts for over half of national R&D expenditure, marking progress but highlighting the need for increased public investment and stronger industry-academia links to boost long-term competitiveness.
India’s latest research and development figures offer both encouragement and a warning. According to the Department of Science and Technology’s annual report, private industry accounted for 51.8% of the country’s gross expenditure on research and development in 2023-24, the first time business spending has overtaken the combined contribution of the Union and state governments. That marks a notable shift from 45.5% in 2021-22 and suggests companies are beginning to shoulder a larger share of innovation costs.
Yet the broader picture remains sobering. The Economic Survey 2025-26 puts India’s R&D spending at about 0.64% of GDP, a level that has barely moved for more than a decade. That compares poorly with spending in advanced economies and even with major Asian rivals. The gap matters because a higher private share does not automatically mean a stronger innovation system if total investment remains low.
There is also a structural issue in where private money goes. Business-backed research is naturally drawn to sectors with quicker commercial pay-offs, such as pharmaceuticals, software, automotive components, electric vehicles and consumer technology. Those industries are important, but they do not by themselves build strength in semiconductors, advanced materials, critical minerals processing, defence systems, foundational artificial intelligence or energy storage, all of which are central to long-term competitiveness and strategic autonomy.
The deeper challenge is that India’s innovation economy still lacks the dense links seen in countries where universities, laboratories and industry work closely together. Decades of protected manufacturing and a services-led growth model allowed many firms to grow without developing large in-house research arms. At the same time, public institutions and private companies have often operated in isolation, with limited co-funded projects or movement of researchers between academia and industry. The result is that India may now be closer in form to advanced economies, but not yet in substance. To close that gap, higher private spending will need to be matched by stronger public investment, better collaboration and a more deliberate push into strategic technologies.
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